Should Americans Lose More Job Opportunities To BPO Philippines and Other ‘Tiger Countries’?

a blog banner for Should Americans Lose More Job Opportunities To BPO Philippines and Other 'Tiger Countries'?Is it true? Outsourcing to BPO Philippines and other nations reduce the chances for American citizens to get jobs?

Well the truth is, it’s still impossible to know what the true impact of outsourcing is to the economy.

But let us arm ourselves with some basic facts. With all of the debate surrounding outsourcing, it is a good idea to review the facts and data. So that we may begin to make sense of the arguments for and against outsourcing.

In this article, we will discuss how outsourcing jobs affects US employment.

 

The One Reason Why Companies Outsource

Let us plunge directly to the deep end.

68% of companies in the US outsource their services to low-cost countries including small businesses. If there are 10.75 million businesses in the US as of March 2020, 7.31 million of them prefer to hire people from developing countries than Americans.

And it does not stop there. Business process outsourcing market is poised to grow by USD 40.16 billion during 2021-2025, progressing at a CAGR (Compound Annual Growth Rate) of over 4% during the forecast period.

This implies that outsourcing is bottomless for businesses. It keeps on going deeper and deeper, leaving behind companies that decline to outsource.

Now, the question is: Why is outsourcing so attractive to businesses and entrepreneurs?

According to Deloitte, one of the most trusted lists for outsourcing statistics and market research in the industry, companies see outsourcing as an effective cost reduction strategy.

In their report 70% of the 40 executives they interviewed agreed that the key objective of outsourcing is to minimize cost.

Outsourcing objectives Percentage
Cost 70%
Flexibility 40%
Speed to Market 20%
Access to Tools and Processes 15%
Agility 15%

Location and economy directly affects BPO pricing. In fact, outsourcing to the Philippines alone can help you save up to $16-$25 cost per hour.

To give you an idea of call center pricing by geographic location, here is the updated matrix:

Regions Hourly Rate
United States and Canada $22 – $35+
Western Europe $40+
Australia $35 – $55
Africa and Middle East $15 – $20
Eastern Europe $12 – $25
Latin America $8 – $18
Pakistan $6 -$10
India $5 – 9
Asia and Philippines $6 – $8

The impact of COVID-19 obviously plays a key role here.

With the surge of the virus, collared workers are forced to resign or to retreat at home. Leaving a void in some essential positions.

This inspires businesses to outsource core and non-core services to BPO Manila Philippines and other countries to support the slow and steady collapse of the economy.

 

Implication

Hiring a call center is an excellent strategy to ensure that your company and its clients are constantly communicating. 

It also improves customer service and satisfaction, giving your customers an incentive to return to your firm when they need something.

However, when determining whether or not your company needs a call center, one of the most important aspects to consider is cost. Cost may not be what drives a deal to the table, but dinner isn’t over until the bill has been paid.

Furthermore, we already established that the cost of outsourcing is cheaper compared to insourcing. But what does this imply in the greater sense of things?

US Companies Should Outsource More Jobs to Developing Countries

Insourcing to the USA is cost-inefficient compared to offshore companies.

To enlighten you, here is a comparison of how much it would cost if you hire a US call center agent versus an overseas customer support worker.

Location Salary (per year)
United States $32,625.00
Philippines $3,976.86
India $4,041.59
Europe $14,675.51
Africa $8,073.6
Australia $41,211.50

Labor costs in countries like the Philippines and India are significantly lower than the Western rates because of economics.

This can also be a factor that pushes companies to outsource more than 300,000 American jobs.

Well the truth is opting to get an inhouse customer support team can be pretty costly. Just take into consideration the other fees, charges and expenses you will pay with an inhouse call center besides the salary:

Particulars Cost
QA $45,726
Hiring costs $20,645
Office space $48,000
Software and Hardware $3,600
TOTAL $117,971

However, by outsourcing, you can save up to 20% – 30% of the total expense depending on the call center pricing structure. It is because you will not need to pay huge amounts for office space, software and hardware and hiring costs anymore.

It is not an understatement that outsourcing is really cost-effective. However, should this be a basis to consider outsourcing more jobs to other countries?

The answer is yes. But let us explain further.

 

Why Should You Outsource More?

You, as a businessman, know that not everything is about money

Besides the costs, there are other factors that may convince you to outsource more.

Diversify Skills

Outsourcing allows you to get the best talent from any part of the world.

Your core team might be fantastic at a few things, but nobody is perfect at everything. 

By outsourcing particular tasks, companies are often able to substantially improve performance by drawing on the niche skills of experts in certain fields across countries.

Of course, all companies want the best employees. And this is only possible when we expand our pool of talents.

Managed Risk

Employee turnover is excruciating. 

When someone quits, you lose all of the money you spent on employing and training them. Turnover at the wrong moment (and is there ever a right time?) can disrupt your operations.

Your firm will become more consistent as a result of outsourcing.

If your human resources manager leaves the company at a critical time, you would have to scramble to fill the position (possibly hiring the first acceptable applicant, even if they weren’t great), do the work yourself, or simply go without it.

However, if you outsource services, your operations will run smoothly and without risk. 

Access to New Resources

Recruiting and training a new team member is time-consuming and costly.

You must demonstrate your procedures and workflows to them or develop special processes just for them. Sometimes, you may need to invest in their schooling to ensure that they have the necessary abilities for your company. 

These costs are assumed by the service provider when you outsource your core or non-core business functions.

However, BPO companies in metro manila can bring specialized knowledge, expertise, and experience that you wouldn’t be able to afford on your own. 

Any licenses or accreditation that the task necessitates are the responsibility of the service provider. They keep up with industry changes and trends, learn new techniques, and improve their skills by focusing on their area of expertise.

BPOs also have access to expertise and tools that you may not require today but will require in the future.

 

Where Can I Outsource?

BPO companies in the Philippines have one thing in common, they are affordable and ready to help other companies. That is why companies that outsource to Philippines return for support to their other ventures.

So to make it easy for you, we compiled the top 10 SME-focused call centers in the Philippines for the last 3 years:

 

Top BPO Companies in Philippines 2019

Rank Company
1 Helpware
2 Flatworld Solutions
3 Fusion BPO Services
4 Magellan Solutions
5 Premier BPO
6 KMC Solutions
7 WNS Global Services
8 Unity Communications
9 AnswerFirst
10 Teletech

 

Top BPO Companies in Philippines 2020

Rank Company
1 Teletech
2 Magellan Solutions
3 Global Sky
4 KDCI Outsourcing
5 Propelrr
6 Loft
7 Main Source 365 Tech
8 D&V Philippines
9 TaskBullet
10 7th Media Digital

Top BPO Companies in Philippines 2021

Rank Company
1 Magellan Solutions
2 Six Eleven Global Teleservices
3 Cloudstaff
4 Infinit-O
5 Support Services Group
6 HireSmart Staff
7 AS White
8 Helpware
9 Office Partners 360
10 Teletech

 

Conclusion

As what it may look like, outsourcing companies do not intend to steal jobs from Americans. It is just that the tradeoff, for businesses, is too good to ignore.

Keep in mind that BPOs are like other businesses too. They function to cater to the demands of specific industries. Whether that is IT support or customer service, it will require people and a level of expertise. 

Even more so, many foreign employees are hired to help with local marketing, contacts, and breaking language barriers. It is a common strategy to help companies expand and reach new markets.

It is no surprise that in the United States, the phenomenon of job outsourcing has sparked a lot of debate. 

On the one hand, this common practice helps American businesses cut costs, increase worldwide competitiveness, and deliver reasonably priced goods and services to the global market. 

The advantages also extend to outsourced countries. The Business Process Outsourcing industry in the Philippines flourished thanks to US companies. In fact, some Philippines companies have been outsourcing jobs to the U.S., too.

 

Want to Start Outsourcing Companies in the Philippines?

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Why not with us? We are Magellan Solution and we provide premier BPO services to SMEs. 

You can guarantee best results with our wide-range of services from lead generation to order taking services, unwavering focus on quality over quantity, industry discipline, state-of-the-art technology, pool of talents and business transparency.

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If you want to experience a difference in your business, shoot us a message! Our business development team will be with you ASAP.

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